There isn’t much to be done other than to ride it out. The sector model’s XLE position is as
volatile as any sector position I’ve held.

The role of China is not a simple matter of directly related
markets. Our relationship with them is not meaningful as a trade partner, since
only 1% of our GDP is exported to China.
The entire country could disappear with no direct effect on our exports.

Demographically this reversal of monetary easing is premature,
as
I’ve noted.

If Schiff is correct, this is out of the Fed’s hands. If they don’t enact another round of easing,
the foreign selling of American treasuries will have a tightening effect on its
own.

And all this would overcome what I have written earlier
about the market not being over-valued when divided by M1. A contraction of M1 would require a
proportional contraction of the S&P, just as QE led to the expansion of the
S&P.

Just when you think you have the Fed figured out, reality
takes its place…